BLEAK is one word that could be used to describe the latest jobs data published this morning, with unemployment rising to 4.7%. Financial experts slammed the Government’s handling of the economy and say the Bank of England now faces a huge dilemma.
The early estimate of payrolled employees for June 2025 fell by 178,000 (0.6%) on the year, and by 41,000 (0.1%) on the month, to 30.3 million.
Meanwhile, the UK unemployment rate for people aged 16 years and over was estimated at 4.7% in March to May 2025. This is above estimates of a year ago, and up in the latest quarter. Additionally, the estimated number of vacancies in the UK fell by 56,000 on the quarter, to 727,000, in April to June 2025.
This is the 36th consecutive period where vacancy numbers have dropped compared with the previous three months, with vacancies decreasing in 14 of the 18 industry sectors.
The UK Claimant Count for June 2025 increased on the month and the year, to 1.743 million. Meanwhile, on the earnings front, in March to May 2025 annual growth in employees’ average earnings in Great Britain for both regular earnings (excluding bonuses) and total earnings (including bonuses) was 5.0%.
Financial experts were withering in their assessment of the data.
Harry Mills, Director at Oku Markets, said: “When it rains, it pours and right now it’s absolutely chucking it down on the UK Chancellor. Wave after wave of poor economic data piles the pressure onto our already teary-eyed finance chief.
“This caps off a dire week for the UK economy with last Friday’s news that GDP shrank 0.1% in May after a 0.3% drop in April, and Tuesday’s news that inflation unexpectedly rose to 3.6% in June. This leaves the Bank of England stuck between delaying rate cuts to tame prices or easing policy to support a weakening economy; a dilemma that’s likely to weigh further on the pound.”
UK is a complete basket case
David Belle, Founder and Trader at Fink Money, commented: “The misery being caused by this government is quite simply staggering. It is unbelievable that Reeves thought increasing the Employers’ National Insurance contributions burden on businesses would be good.
“The Bank of England is now dealing with a seriously big conundrum. Do they cut rates and risk inflation shooting higher or do they wait and see further growth stagnation? This falls firmly at the feet of the Treasury and Chancellor. The UK is a complete basket case right now.”
BoE will seek to avoid recession
Mirroring Belle, Anita Wright, Chartered Financial Planner at Ribble Wealth, said “the Bank of England is now caught in a serious dilemma. Do they prioritise fighting a recession, which clearly seems to be on the horizon, or do they stay focused on controlling inflation, which is starting to tick up again? Threadneedle Street will almost certainly now prioritise avoiding a recession. So what’s the likely outcome? The Bank of England will begin cutting interest rates to cushion the downturn. But by doing so, it risks re-accelerating inflation.”
Michelle Lawson, Director at Lawson Financial, said that while this latest jobs data may be a surprise to the Government, it won’t for everyday businesses: “Today’s data will not be a shock to business owners, but it will be a serious shock to our Government. I just cannot fathom why they are creating such carnage with wild abandon and ignoring all the experts with everything they do. The country is on its knees and it will be hard to come back from this.”
Rising unemployment a warning sign
Samuel Mather-Holgate, Independent Financial Adviser at Mather and Murray Financial, said “Reeves needs to rethink her policy of bashing business with super high taxes. A reversal of the jobs tax can’t come soon enough to release the pressure around the neck of UK plc. Rising unemployment is the clearest warning sign for the Chancellor she won’t get growth if she’s taxing the machine that creates it. It’s also a headache for the Bank of England, who will have to decide what’s more important: higher inflation or a stagnant economy”.
Ben Perks, Managing Director at Orchard Financial Advisers, said the government needs to reverse its approach entirely: “When will they remove the shackles from businesses? The evidence is clear: eight consecutive months of declining payrolls. This government have made it unattractive to scale up and employ more staff. They need to flip their approach on its head. Give businesses a boost and stop burdening them, and you’ll quickly see these figures reverse.”
Ranald Mitchell, Director at Charwin Mortgages, added: “The fact that payrolls have fallen for eight straight months since the Budget is a damning indictment of how UK plc is being run. Growth doesn’t come from squeezing employers, it comes from backing them. Right now, the Government is doing the opposite, and the jobs market is flashing warning lights. It’s little wonder unemployment is creeping up when the Government’s so-called growth plan is little more than a burden on businesses.”
Photo by Maik Winnecke on Unsplash
